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Dairy Product Labeling Isn't Such a COOL Concept

Earlier this month, U.S. Sens. Sherrod Brown, D-Ohio, Russ Feingold, D-Wis., and Al Franken, D-Minn., introduced a bill that would extend mandatory country-of-origin labeling to all dairy products. All three senators have said that a new COOL law would help American dairy farmers compete more effectively in U.S. supermarkets and would help them weather the current economic crisis facing the dairy industry.

In a press release, Sen. Feingold added that “with the discovery last year of widespread use of melamine in Chinese dairy products, consumers deserve to know whether the milk used to produce the dairy products they buy meets the high safety standards used in the U.S.”

Passage of this bill might make some great campaign ads, but it will do very little to help U.S. dairy farmers, and it won't make the U.S. food supply any safer.

According to data from the International Dairy Foods Association, the U.S. did import more than $1.2 billion of dairy products during the first six months of 2009. Fluid milk accounted for $3 million of that total. Yogurt, butter, ice cream, dry milk and condensed milk combined for about $70 million more. To put this in perspective, according to recent IRI data, annual U.S. sales of these products total more than $20 billion. In the U.S., the vast majority of these products are already produced domestically.

In terms of fresh dairy foods, cheese is the exception, typically accounting for between 30% and 40% of U.S. dairy imports. Top exporters to the U.S. include Italy, New Zealand, France, Argentina and Australia, and most European cheese exporters already label their country of origin as a point of pride.

Processed food ingredients such as casein and milk protein concentrates account for the other large portion of U.S. dairy imports, and these are sourced primarily from New Zealand, Europe and India, according to the business journal Dairy Industries International. It should be noted that regulators have never attempted to apply COOL to processed foods, and one wonders why they would attempt to start here.

It is true that U.S. dairy farmers are struggling this year. In 2008, worldwide droughts, commodity price inflation and soaring input costs drove dairy prices to historic highs. Since then, farm-gate prices have collapsed worldwide, due to a combination of overproduction and the global recession. Many, many U.S. dairy farmers have been bankrupted. Even for a cyclical industry, this swing has been brutal.

But, COOL will hardly solve this problem. It is tough to see how mandated labeling would even help. In fact, those applauding the measure should consider the problems that COOL for meat has raised between the U.S. and Canada. Earlier this month, Canada asked the World Trade Organization to assemble an official dispute panel over the issue. What few gains dairy farmers could expect from COOL could easily be lost through retaliatory damage to U.S. dairy export markets.